Whether vat not pd is fraud done by director of unlisted co?

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Jayesh (Querist)
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11 December 2012 Rected All,

My one of client is unlisted ltd., Vat Dept. had issued notice & assessment is done with FY 05-06 to 07-08 in which he is beneficiary of Hawala dealer and accordingly ITC is disallowed and penalty n int. is levied.

Now fact of assessee is that
1) it has genuine purch.,and paid by cheque but vendor has not paid vat amt. and not filed return,
2) It dose not have any assets including bank balance,

Now my questions are,
1)Whether Purch.fr. dealer who seems later Hawal is fraus conduct of directors??
2)Whether non-payment of vat as per asst. dues consequences??
3)If co.is liquidated what will happen to assessment dues??
4)Co.having 4 directors, Whether all liable jointly and severally??

Expecting quick reply

CA Jayesh Shah
ph. - 9821470007/9076552290

Amol S Joglekar

Amol S Joglekar (Expert)
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11 December 2012 01. Directors acting in good faith and in due course of trade can not be held responsible. This has to be judged by the Civil/ Criminal courts and not VAT dept. The onus of proof of "not guilty" vests with the Directors.
02. If 1 above is proved, then non payment of VAT by the HAWALA turned seller can not be said to be the responsibility of Purchaser.
03. Position will not change even if the company goes in liquidation.
04. The directors liability is prima facie joint and several unless some specific arrangement is made in Articles of Association.

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